FYI Article – Disclosure: Too Much of a Good Thing?

July 2014

There is a lot of talk of disclosure overload – disclosure requirements are ever increasing and it is often difficult to identify what is important in financial statement notes. In light of this, the International Accounting Standards Board (IASB) started a multi-part Disclosure Initiative to determine how to improve disclosure requirements in IFRSs.

Earlier this year, the IASB published an Exposure Draft of proposed amendments to IAS 1 Presentation of Financial Statements which is the first part of the initiative.

These proposals clarify existing requirements, rather than change them – changes will be part of later stages of the project after appropriate research is done. The IASB hopes that the proposals will assist companies to use judgment to make presentation and disclosure more relevant.

The Exposure Draft proposes to clarify the following:

  • Materiality applies to note disclosure. A company need not provide a disclosure required by a standard if the information is not material. Disclosing immaterial information may reduce the understandability of the financial statements by detracting from the material information.  Information should not be aggregated or disaggregated in a manner that obscures useful information.
  • Order of the notes. IAS 1 does not require a specific order for the notes. Companies should develop a systematic approach, considering understandability and comparability. For example, notes could follow the order of line items in the financial statements, notes containing more significant information could come before other notes, or the accounting policy for financial instruments could be included in the financial instrument note.
  • Information to be presented in the statement of financial position and the statement of profit or loss and other comprehensive income. IAS 1 currently identifies certain lines that should be shown in those statements. Those lines are not required to be shown separately if they are not material – and should be disaggregated if this would provide more relevant information. The Exposure Draft proposals also clarify that additional subtotals can be included provided certain criteria are met, similar to the Canadian Securities Administrators guidance on additional GAAP measures.

Submit your comments on the Exposure Draft to the IASB by July 23, 2014.


Rebecca Villmann, CPA, CA, 
CPA (Illinois)
Director, Accounting Standards Board
Phone: +1 (416) 204-3464